The media frenzy surrounding graduation rates has been sparked by No Child Left Behind (NCLB), which requires states to factor in graduation rates for high schools to demonstrate schools are meeting the adequate yearly progress (AYP) requirements of the law. With the reauthorization of NCLB on the horizon, the debate around this issue will likely intensify as different interests are already suggesting that the reporting and use of disaggregated graduation rate data serve as a key component of high school accountability, including annual and ultimate goals for improving graduation rates.

The NCLB regulations define "graduation rate"—and thereby offer a method of calculation—as:

the percentage of students, measured from the beginning of high school, who graduate from high school with a regular diploma (not including an alternative degree that is not fully aligned with the state's academic standards, such as a certificate [of attendance] or a GED) in the standard number of years [section 200.19(a)(i)].

But the regulations also say that states may seek U.S. Department of Education approval to use another definition that more accurately measures the rate of students who graduate from high school with a regular diploma. Some states have exercised this alternative by making a case for extending the standard time for graduation—which is widely interpreted to mean four years—for special needs students. (Five states have received approval to count students with disabilities as graduating on time if the student's individualized education plan calls for extra years of high school beyond age 18. The Department also allowed Tennessee to apply this extra time to graduate to both students with disabilities and English language learners.)

In general, the Department has indicated that to "graduate on time," students must complete one grade per year from the beginning of high school (usually ninth grade). This interpretation excludes students who repeat a grade from being considered "graduates" for the sake of NCLB accountability; however, these students are not considered "dropouts" either, if they remain in school.

Unlike other AYP calculations, NCLB does not require graduation rates to be disaggregated for accountability. Policy insiders have suggested that this was an oversight in the original bill and that as ESEA is reauthorized or otherwise amended, subgroup disaggregation for high school graduation rates may be added. This would be devastating for high schools, too many of which already struggle to make adequate yearly progress under the rigid requirements and statistical anomalies of NCLB.

NCLB also does not require graduation rates to move toward a specific goal (such as reaching 100 percent by the year 2014), although most states specified in their NCLB accountability plans an actual target graduation goal. (Such state target goals range from 55 percent to 95 percent.) Instead of setting specific targets, some states (e.g., California) use a growth rate in the percent of students graduating.

In 2004, revisions of state accountability plans, three states adjusted their graduation rate targets. Maryland and Pennsylvania permitted high schools to either make the specified target or show a percentage increase; Washington state revised its target down to 66 percent from 73 percent after education officials began using a more accurate method of calculating the state's graduation rate.